Cost
The Cost field represents the amount paid to the vendor per unit for the item. When adding a new item to Prism Inventory, you will typically enter both a Price and Cost. The Price and Cost are used to calculate the item's Margin. When you order items from vendors on POs and receive items on Vouchers, each item's PO Cost is automatically entered. If the amount charged by the vendor has changed, the user can edit the PO Cost and the change will be carried to the voucher. When the voucher is updated and the system is set to use the default Inventory Costing Method of "Average", the item's Cost in Inventory will be updated.
Here are the key cost-related fields available in Prism. You can add these fields to screen designs by configuring Grid Format preferences. Note: The ability to view cost-related fields is controlled by the following permissions: Common > See Item Cost
Cost Fields
| Field | Grid Formats | Description |
|---|---|---|
| Alt Cost | Adjustment Memo Items, Voucher/ASN - PO Items | When items can be ordered from multiple vendors, Prism enables you to assign a separate Cost, Vendor Code and UPC (or ALU) to the item. For these multi-vendor items, the primary vendor's information is entered in the Cost, Vendor Code and UPC (or ALU) fields. Each additional vendor's information is entered in the Alt Cost, Alt Vend Code and Alt UPC fields. Currently, alternate vendors must be defined in RIL Management. |
| Cost | Adjustment Memo Items, Inventory Lookup, Inventory Search, Voucher/ASN | The cost paid to the vendor for each unit of the item. |
| Ext Cost | Purchase Order, Voucher/ASN, Voucher/ASN - PO Items | The extended cost for the item on the document. Cost x Doc Qty |
| Ext FC Cost | Purchase Order, Voucher/ASN - PO Items | Extended cost in the vendor's assigned currency. |
| FC Cost | Purchase Order | The cost for the item in the vendor's assigned currency. |
| Orig Cost | Adjustment Memo Items, Voucher/ASN | The cost before any changes or adjustments |
| Order Cost | Inventory Lookup, Inventory Search | Order Cost provides an alternative field for storing cost information. In addition, the Order Cost field is used by the Trade Discounts and Foreign Currency Order features. |
| PO Cost | Purchase Order, Voucher/ASN - PO Items | The cost for the item on this purchase order. By default, the item's Cost in inventory is entered; however, you can edit the PO Cost for specific orders as needed. |
| Trade Discount % | Inventory Lookup, Inventory Search, Purchase Order | The Trade Discount % entered in the vendor record. When using trade discounts, the discount is applied to the Vendor List Cost to determine the Order Cost. |
| Vendor List Cost | Purchase Order, Voucher/ASN - PO Items | The vendor's list cost before any trade discount is applied. When using trade discounts, the discount is applied to the Vendor List Cost to determine the Order Cost. |
| Old Cost/Adjusted Cost/Cost Difference | These fields are on Cost Adjustment Memos and show the difference between the current cost, the new cost, and the difference between the two. |
Voucher Cost
Voucher Cost is an important value because of its potential impact on Inventory Cost and ultimately on the inventory valuations that are entered on financial reports.
There are two primary questions that need to be answered regarding Voucher Cost:
1. How is the Voucher Cost field populated?
2. What happens if I receive items into Inventory at a Voucher Cost different from current Inventory Cost?
Cost to Use for POs and Vouchers
The Cost field in the item's Inventory record is the main field for tracking cost. However, there is also an Order Cost field in the item record. The Order Cost field provides an additional field for tracking cost and is used with the Trade Discounts and Foreign Currency Orders features. So which field will be used to populate PO Cost when a user creates a PO (or Voucher Cost when a user creates a voucher)? That will be determined by the "Cost to Use for POs and Vouchers" preference. The default setting for the preference is to use Order Cost on POs and Vouchers. However, the default value for Order Cost field is 0.00; therefore, unless you are doing something special with the Order Cost field, like using Trade Discounts or Foreign Currency Orders, the Order Cost field will be actually be populated from the Cost field.
The following table lists the available options for the "Cost to Use for POs and Vouchers" preference.
| Preference | Description |
|---|---|
| Cost to Use for POs and Vouchers | Order Cost: If the item has an Order Cost entered in the Inventory record, then use Order Cost on Purchase Orders and Vouchers. If no Order Cost has been assigned to the item (i.e. the item still has the default Order Cost of 0.00), the when creating a PO or Voucher, the item's Inventory Cost will be used instead. Inventory Cost: Always use the item's Inventory Cost for PO Cost and Voucher Cost. Trade Discounts: The Trade Discounts option is for a future release feature. |
Inventory Costing Method
Whether the Voucher Cost is populated by Order Cost or Inventory Cost, what happens when the voucher is updated the Voucher Cost differs from the Inventory Cost? That question is answered by the "Inventory Costing Method" preference. By default, the quantities received at the new cost are averaged in with the quantities at the existing cost.
The following table lists the available options for the "Inventory Costing Method" preference.
| Preference | Description |
|---|---|
| Inventory Costing Method | Average: This is the default setting. If items are received at a Voucher Cost that is different than the current cost in inventory, the new quantities at the new cost are averaged in with the existing quantities at the old cost. Leave: If selected, inventory Cost is always left unchanged. Overwrite: If selected, the Voucher Cost becomes the new Cost in Inventory. |
Cost Difference Threshold
In addition, to the preferences in Purchasing > General, you need to know about the Cost Difference Threshold preference in Node Preferences > Merchandise > Inventory > General. Select to enable the Cost Difference Threshold feature, then enter a percentage in the Provide Warning When New Cost Differs From Old Cost By field. If this preference is selected, when receiving items, if the new cost differs from the old cost by more than the specified percentage, a warning will be issued. You will still be allowed to complete and update the voucher. Default = 100 (meaning there can be a 100 percent difference between the item's old cost and new cost.
Cost Adjustment Memos
If necessary, you can update item cost by creating a cost adjustment memo. If you edit Cost, an adjustment memo is created automatically.
Updating Cost using Price Manager
Price Manager is typically used to mark prices up or down; however, you can also use Price Manager to adjust costs of a group of items.
Cost Permissions
| Permission | Description |
|---|---|
| Adjustment Memos - Create Cost Memo | Allow group members to create cost adjustment memos. |
| ASN Vouchers - Change Cost | Allow group members to change the Voucher Cost for items on ASN Vouchers |
| Common - See Item Cost | Allow group members to view cost-related fields, whatever the document. |
| Inventory - Edit Item Cost | Allow group members to edit the Cost field in the item's Inventory record. |
| Inventory - Edit Item Order Cost | Allow group members to edit the Order Cost field in the item's Inventory record. |
| Vouchers - Change Cost | Allow group members to edit the Voucher Cost of items on receiving vouchers. |